PETALING JAYA: RAM Rating Services Bhd has assigned its inaugural sovereign ratings of between AAA and BB1 to five Asean countries Malaysia, Singapore, Indonesia, Thailand and the Philippines.
The ratings were assigned under the new rating global and Asean scales launched by the agency as part of its global initiative.
The two rating scales compared and measured the best companies globally and in Asean, respectively, for their credit worthiness their ability to pay on a timely and adequate manner.
RAM's rating scale ranges from AAA to D, with a AAA-rated sovereign having superior capacity to meet its financial obligations while a sovereign rated D means country is currently in debt default.
The different rating categories between AAA and D signify relatively weaker payment capacity compared to a previous category.
For example, a BBB rating denotes moderate capacity to meet financial obligations which is less strong compared to an A rating, which means adequate capacity.
Chief executive officer Foo Su Yin told StarBiz that the rating agency's decision to focus on sovereign ratings for the five Asean economic heavyweights at the onset was in line with its global aspirations.
“The Asean bond markets are on a steep developmental curve, supported by ongoing regulatory reforms targeted at easing capital flows and promoting greater financial integration.
“Hence, the introduction of sovereign ratings is opportune and in line with the more integrated Asean,'' she added.
She said the five countries displayed economic expansion that had generally outpaced global growth and remained relatively resilient through the financial turmoil experienced by advanced economies in 2009.
The underlying strength of the region's largest economies stemmed from a variety of factors, which included a track record on price stability, well-diversified external trade structure and robust overall banking sector, Foo noted.
Meanwhile, RAM in its Public Finance Ratings (January 2013) Publication (Leading Asean Sovereigns) said the five countries also exhibited improving external strength through the build-up of foreign-exchange reserves due to consistent current-account surpluses key factors in arriving at the respective ratings.
This was especially true for the region's more export-oriented economies such as Malaysia and Singapore, it added, noting that the region's overall debt burden had substantially been reduced favourably throughout the decade in comparison with other economic regions.
Moving forward, RAM said Asean would be taking on a greater role in facilitating global trade and finance through the realisation of Asean Economic Community by 2015.
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